The Impacts of Rising The Impacts of Rising Gasoline PricesGasoline Prices

Doug MacIntyreDoug MacIntyreEnergy Information AdministrationEnergy Information Administration

September 30, 2005September 30, 2005

Metropolitan Washington Council Metropolitan Washington Council

of Governmentsof Governments

U.S. Average Retail Regular Gasoline Prices U.S. Average Retail Regular Gasoline Prices

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

J F M A M J J A S O N D

$/G

allo

n

2000 2001 2002 2003 2004 2005

Source: EIA Weekly Retail Gasoline Price Survey.

Retail Regular Gasoline PricesRetail Regular Gasoline Pricesin DC Areain DC Area

$1.00

$1.50

$2.00

$2.50

$3.00

$3.5001

/01/

03

03/0

1/03

05/0

1/03

07/0

1/03

09/0

1/03

11/0

1/03

01/0

1/04

03/0

1/04

05/0

1/04

07/0

1/04

09/0

1/04

11/0

1/04

01/0

1/05

03/0

1/05

05/0

1/05

07/0

1/05

09/0

1/05

US DC

MD VA

Source: AAA Fuel Gauge Report

DC Retail Regular Gasoline PricesDC Retail Regular Gasoline Prices

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

1/1

2/1

3/1

4/1

5/1

6/1

7/1

8/1

9/1

10/1

11/1

12/1

2002 2003

2004 2005

Source: AAA Fuel Gauge Report

MD Retail Regular Gasoline PricesMD Retail Regular Gasoline Prices

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

1/1

2/1

3/1

4/1

5/1

6/1

7/1

8/1

9/1

10/1

11/1

12/1

2002 2003

2004 2005

Source: AAA Fuel Gauge Report

VA Retail Regular Gasoline PricesVA Retail Regular Gasoline Prices

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

1/1

2/1

3/1

4/1

5/1

6/1

7/1

8/1

9/1

10/1

11/1

12/1

2002 2003

2004 2005

Source: AAA Fuel Gauge Report

Taxes - a monthly national average of federal and state taxes applied to gasoline or diesel fuel

Distribution & Marketing Costs & Profits - the difference between the average retail price of gasoline as computed from EIA's weekly survey and the sum of the other 3 components

Refining Costs & Profits - the difference between the monthly average of the spot price of gasoline (used as a proxy for the value of gasoline as it exits the refinery) and the average price of crude oil purchased by refiners (the crude oil component).

Crude Oil - the monthly average of the composite refiner acquisition cost, which is the average price of crude oil purchased by refiners

What We Pay For In a Gallon of Regular GasolineWhat We Pay For In a Gallon of Regular GasolineAugust 2005August 2005

Retail Price: $2.49/gallonRetail Price: $2.49/gallon

0

10

20

30

40

50

60

70

80

Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Do

lla

rs p

er

Ba

rre

l

Forecast

WTI Crude Oil Prices Expected to Remain High in WTI Crude Oil Prices Expected to Remain High in September Short-Term Energy OutlookSeptember Short-Term Energy Outlook

Sources: History: EIA; Projections: Short-Term Energy Outlook, September 2005.

World oil demand growth, led by China, is surging at very high rates

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1991-1999Avg.

2000 2001 2002 2003 2004 2005 2006

Mill

ion

Ba

rre

ls p

er

Da

y

China

US

Recent World Oil Demand Growth Has Been StrongRecent World Oil Demand Growth Has Been Strong

Sources: History: EIA; Projections: Short-Term Energy Outlook, September 2005, Medium Recovery Case.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1991-1997

Average

1998 1999 2000 2001 2002 2003 2004 2005 2006

Mil

lio

n B

arre

ls p

er D

ay

Forecast

Spare capacity hit its lowest level in 30 years in 2005; little increase in 2006

Spare Production Capacity is MinimalSpare Production Capacity is Minimal

Sources: History: EIA; Projections: Short-Term Energy Outlook, September 2005, Medium Recovery Case.

2.3

2.4

2.5

2.6

2.7

2.8

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Bil

lio

n B

arr

els

NOTE: Colored Band is Normal Stock Range denoting average inventories from 1998-2002.

OECD Commercial Inventories

2002

2003

20002004

2005

OECD Commercial Oil Inventories Remain OECD Commercial Oil Inventories Remain Better than Last Year Through JulyBetter than Last Year Through July

Source: History through July 2005: Oil Market Report, IEA, September 2005.

0

10

20

30

40

50

60

70Ja

n-9

0

Jan

-91

Jan

-92

Jan

-93

Jan

-94

Jan

-95

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

20

05

Do

lla

rs p

er

Ba

rre

l/D

ay

s S

up

ply

0

2

4

6

8

10

12

14

Mil

lio

n B

arr

els

pe

r D

ay

WTI Spot Price (2005 $)OECD Days SupplyWorld Excess Production Capacity (right axis)

Low Excess Capacity and Low Days of Supply Are Low Excess Capacity and Low Days of Supply Are Fundamentals Supporting High Crude PricesFundamentals Supporting High Crude Prices

Sources: WTI: Reuters; OECD Days Supply: International Energy Agency & EIA Estimates; World Excess Production Capacity: EIA estimates.

180

190

200

210

220

230

240

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06

Mil

lio

n B

arre

lsU.S. Total Gasoline InventoriesU.S. Total Gasoline Inventories

Sources: History: EIA; Projections: Short-Term Energy Outlook, September 2005.

Actual Forecast

NOTE: Colored Bands are Normal Stock Ranges

8,000

8,250

8,500

8,750

9,000

9,250

9,500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Th

ou

san

ds

of

Bar

rels

per

Day

2002

2003

20042005

(estimate)

U.S. Finished Gasoline DemandU.S. Finished Gasoline Demand

Sources: History: EIA

Plantation and Colonial PipelinesPlantation and Colonial Pipelines

• EIA Gasoline & Diesel Fuel Update Page, http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp

• Primer on Gasoline Prices, http://www.eia.doe.gov/neic/brochure/oil_gas/primer/primer.htm

• AAA Fuel Gauge Report, http://www.fuelgaugereport.com/

• This Week In Petroleum, http://tonto.eia.doe.gov/oog/info/twip/twip.asp

• National Energy Information Center, (202) 586-8800, infoctr@eia.doe.gov

• Doug MacIntyre, (202) 586-1831, douglas.macintyre@eia.doe.gov

Links and ContactsLinks and Contacts